WaFd Continues Tracking to Plan Post-Acquisition; Announces Quarterly Earnings Per Share of $0.75

Rhea-AI Summary

WaFd (Nasdaq: WAFD) announced quarterly earnings of $64.56 million for the quarter ended June 30, 2024, marking a 306% increase from the previous quarter and a 5% increase year-over-year. Earnings per share (EPS) stood at $0.75, up from $0.17 in the prior quarter but down 16% from $0.89 a year earlier. These results include $2.3 million in acquisition-related costs. Adjusted return on equity (ROE) was 9.4%, compared to 8.7% in the previous quarter and 11.1% a year ago. Revenue growth was driven by the integration of Luther Burbank , increased loan origination, and a substantial CRE loan sale.

WaFd also reported a 31.8% increase in customer deposits and a 154.2% rise in cash and cash equivalents. Net interest income grew by 5% year-over-year to $177 million, although net interest margin decreased from 3.27% to 2.56%. The company plans to launch new mobile and online banking apps to enhance customer experience.

Positive

• Quarterly earnings increased by 306% to $64.56 million.
• EPS rose from $0.17 to $0.75.
• Adjusted ROE increased to 9.4%.
• Customer deposits grew by 31.8%.
• Cash and cash equivalents rose by 154.2%.
• Net interest income increased by 5% year-over-year.
• Successful integration of Luther Burbank

Negative

• EPS decreased by 16% year-over-year.
• Net interest margin decreased from 3.27% to 2.56%.
• Tangible common shareholders' equity per share decreased by 3.1%.

Insights

Financial Analyst

For retail investors, the key takeaway is that the acquisition appears to have strengthened WaFd's balance sheet and profitability in the short term. However, the decrease in net interest margin and the year-over-year drop in earnings per share should be monitored. The integration seems smooth and the sale of $2.6 billion in CRE loans without loss is a positive indicator of asset quality and liquidity.

Market Research Analyst

Retail investors should note that while the integration of LBC and asset growth are positive indicators, the shift towards time deposits could impact the bank's flexibility in the future. Moreover, the decrease in tangible book value per share and net interest margin should be carefully watched as potential areas of concern.

Tech Expert

The focus on technology suggests a commitment to stay competitive in a market increasingly driven by digital banking solutions. For retail investors, these tech investments are a positive sign, indicating that WaFd is not only focusing on growth through acquisitions but also on improving customer service and operational efficiency.

SEATTLE--(BUSINESS WIRE)-- WaFd, Inc. (Nasdaq: WAFD) (the "Company"), parent company of Washington Federal Bank ("WaFd Bank" or the "Bank"), today announced quarterly earnings of $64,560,000 for the quarter ended June 30, 2024, the first full quarter after successfully completing the acquisition of California-based Luther Burbank Corporation ("LBC"). This represents an increase of 306% from net earnings of $15,888,000 for the quarter ended March 31, 2024 and an increase of 5% from net earnings of $61,775,000 for the quarter ended June 30, 2023. After the effect of dividends on preferred stock, net income available for common shareholders was $0.75 per diluted share for the quarter ended June 30, 2024, compared to $0.17 per diluted share for the quarter ended March 31, 2024, a $0.58 or 341% increase, and $0.89 per diluted share for the quarter ended June 30, 2023, a $0.14 or 16% decrease in fully diluted earnings per common share. For the quarter ended June 30, 2024, return on common shareholders' equity was 9.2% and return on assets was 0.87%. These results reflect acquisition-related costs of $2.3 million for the quarter. Adjusted for these expenses, return on common shareholders' equity for the quarter ended June 30, 2024 was 9.4% compared to 8.7% for the adjusted quarter ended March 31, 2024 and 11.1% for the quarter ended June 30, 2023. Adjusted, return on assets for the quarter ended June 30, 2024 was 0.9% compared to 0.9% for the adjusted previous quarter and 1.1% for the same quarter in the prior year. For a reconciliation, see the Non-GAAP Financial Measures section below.

President and CEO Brent Beardall commented, "We are very pleased to report solid results for the first full quarter following the largest acquisition in our history. In addition to successfully integrating Luther Burbank into our operations, we also executed what we believe to be the largest Commercial Real Estate ('CRE') loan sale ever in US banking (excluding FDIC transactions), proving the quality and liquidity of our loans and we did it at no loss to WaFd. Initially, we used the net proceeds of approximately $2.6 billion to pay down $1.6 billion of borrowings with the remainder invested overnight in our Federal Reserve account at 5.40%. Over the next several quarters we plan on redeploying the liquidity into new loans at higher rates. In addition, we have entered into a commitment to sell, with no anticipated P&L impact, approximately $450 million of single-family mortgage loans. We expect that sale to close in late August.

"Our margin for the quarter was 2.56% which we expect to be the nadir for this cycle (assuming no further interest rate increases) as we believe the benefits of both loan sales to be accretive to the margin going forward.

"Contrary to many headlines that are predicting credit challenges for banks, our asset quality is holding up very well. Loan delinquencies decreased from 0.36% at March 31, 2024 to 0.22% at June 30, 2024, while non-performing loans were flat. For CRE, delinquencies are just 0.09% on a portfolio of $9.9 billion.

"Tangible book value per share is a key metric for our management team and we took some dilution in completing the Luther Burbank acquisition in the March quarter. For the June quarter, tangible book value per share grew at a 8.2% annualized rate to $27.18. Our share repurchase plan currently has an authorization of 11 million shares, which provides what we believe is a compelling investment alternative.

"We continue to invest in improvements to our technology to better serve our clients. Over the next few months, we will launch two new apps, a new mobile banking app and a new online account opening app, both built by our affiliate Archway Software. Features will include real time notifications to clients, richer transaction data, five-minute account opening, enhanced fraud detection and prevention and voice authentication. Banking is about relationships, and technology is the front door for our clients. We believe our technology will provide a competitive advantage with our goal being to make banking simple, reliable and fast so our clients can live their lives knowing their financial house is in order."

As a result of the acquisition on February 29, 2024, the Company's balances as of June 30, 2024 reflect a full quarter of the newly combined entity. Given this, the Company's financial results are not directly comparable to prior reported periods. Total assets were $28.6 billion as of June 30, 2024, compared to $22.5 billion at September 30, 2023. Net loans held for investment increased by $3.4 billion, or 19.4%, from September 30, 2023 to June 30, 2024 reflecting the addition of LBC loans. The Company sold $2.8 billion in acquired multifamily loans in the June 2024 quarter and has identified approximately $0.5 billion single family loans to sell and have reclassified them as Held for Sale as of June 30, 2024. Cash and cash equivalents as of June 30, 2024 increased by $1.5 billion, or 154.2%, since September 30, 2023 as a result of the LBC acquisition and the completion of the multifamily loan sale during the quarter. Investment securities increased by $457.7 million compared to September 30, 2023 due to the addition of $529.2 million in securities obtained in the acquisition offset by normal activity during the year.

Customer deposits totaled $21.2 billion as of June 30, 2024, an increase of 31.8% since September 30, 2023 due to deposits obtained in the acquisition. Transaction accounts increased by $1.2 billion or 10.8% during the period, while time deposits increased $4.0 billion or 74.5% as 66% of the LBC deposit portfolio was time deposits. As a result of this mix, the Company’s transaction accounts as a percentage of total customer deposits decreased to 56.3% compared to 67.0% at September 30, 2023. Core deposits, defined as all transaction accounts and time deposits less than $250,000, totaled 81.8% of deposits at June 30, 2024. Deposits that are uninsured or not collateralized were 24.7% as of June 30, 2024, down from 25.7% as of September 30, 2023.

Borrowings totaled $3.9 billion as of June 30, 2024, up from $3.7 billion at September 30, 2023, a net increase of $200 million. The Company utilized proceeds from the multifamily loan sale to pay off $1.6 billion of borrowings which matured during the quarter. The acquisition added $1.4 billion in borrowings to the balance sheet in addition to net borrowing activity of $400 million fiscal year to date. The effective weighted average interest rate of the combined borrowings and other debt was 4.10% as of June 30, 2024, compared to 3.98% at September 30, 2023.

The Company had loan originations of $1.0 billion for the third fiscal quarter of 2024, compared to $0.9 billion of originations in the same quarter one year ago. Offsetting loan originations in each of these quarters were loan repayments of $1.0 billion and $1.1 billion, respectively. The Bank has intentionally slowed new loan production to temper net loan growth. Commercial loans represented 67% of all loan originations during the third fiscal quarter of 2024 and consumer loans accounted for the remaining 33%. Commercial loans are viewed by the Bank as preferable; they generally have floating interest rates and shorter durations. The weighted average period end interest rate on the loan portfolio was 5.29% as of June 30, 2024, an increase from 5.22% as of September 30, 2023.

Credit quality continues to be monitored closely in light of the shifting economic and monetary environment. As of June 30, 2024, non-performing assets were $69 million, or 0.2% of total assets compared to $58 million, or 0.3% of total assets, at September 30, 2023. The percentage of delinquent loans was 0.2% of total loans at June 30, 2024 compared to 0.4% at September 30, 2023. The following table shows the changes in non-performing assets and delinquencies during the current fiscal year including the effect of the LBC acquisition.

	Non-Performing Assets				Delinquencies
	(In thousands)
Balance at September 30, 2023	$	57,924			$	63,315
Decrease in balance		(2,536	)			(5,258	)
Balance at December 31, 2023		55,388				58,057
Acquisition-related additions		13,487				23,258
Decrease in balance		(514	)			(5,267	)
Balance at March 31, 2024		68,361				76,048
Increase (decrease) in balance		426				(29,328	)
Balance at June 30, 2024	$	68,787			$	46,720

The allowance for credit losses including the reserve for unfunded commitments ("ACL") totaled $225 million as of June 30, 2024, representing 1.00% of gross loans outstanding, as compared to $202 million, or 1.03% of gross loans outstanding, as of September 30, 2023. The increase in the ACL reflects the $16.0 million provision recorded on LBC loans held for investment that are not credit deteriorated and the $7.4 million estimated lifetime credit losses for those that are considered purchased credit deteriorated ("PCD"). Net charge-offs were $1 million for the third fiscal quarter of 2024, compared to net charge-offs of $10 million for the prior year same quarter.

The Company paid quarterly dividends on Series A preferred stock on April 15, 2024 and July 15, 2024. On June 7, 2024, the Company paid a regular cash dividend on common stock of $0.26 per share, which represented the 165^th consecutive quarterly cash dividend. During the quarter, the Company repurchased 357,303 shares of common stock at a weighted average price of $26.63 per share and has authorization to repurchase 11,501,005 additional shares. Tangible common shareholders' equity per share decreased by $0.87, or 3.1%, to $27.18 since September 30, 2023. Over the past 12 months, tangible book value per share decreased by $0.40 or 1.4%. The ratio of total tangible shareholders' equity to tangible assets decreased to 8.91% as of June 30, 2024. See the reconciliation for these non-GAAP measures starting on page 12.

Net interest income was $177 million for the third fiscal quarter of 2024, an increase of $8.5 million or 5.0% from the same quarter in the prior year. The increase in net interest income was due to overall growth of the Bank's assets despite the decrease in net interest margin compared to prior year. The net interest margin was 2.56% in the third fiscal quarter of 2024 compared to 3.27% for the same quarter in the prior year. This decrease was the result of the combination of greater growth in interest-bearing liabilities balances than in interest-paying assets and a larger increase in the rate paid on those liabilities compared to the rates earned on interest-earning assets. Average interest-bearing liabilities grew by 43.3% while average interest-earning assets grew by 34.8%. Rates on interest-bearing liabilities increased by 112 basis points outpacing the 37 basis point increase in the average rate on interest-earning assets. Similarly, net interest income was 11.7% higher than the quarter ended March 31, 2024, reflecting three full months post-acquisition, despite a decrease in the net interest margin for the quarter to 2.56%. This drop in margin resulted from an increase of 31 basis points in the rate paid on interest-bearing liabilities versus an increase of 16 basis points on the rate on interest-earning assets.

Total non-interest income was $17.3 million for the third fiscal quarter of 2024 compared to $13.8 million in the prior year same quarter. The increase is largely due to recording unrealized gains for certain equity method investments compared to unrealized gains in the same quarter prior year.

Total non-interest expense was $110.1 million in the third fiscal quarter of 2024, an increase of $15.4 million, or 16.2%, from the prior year's quarter. Compensation expense increased by $6.7 million as a result of $1.4 million in acquisition-related retention costs combined with a larger post-acquisition workforce. Information technology costs increased by $1.8 million due to increased telephone and data lines combined with lingering conversion costs and termination fees on LBC software. FDIC premiums increased $2.3 million compared to the same period last year. Other expense also increased by $3.3 million compared to the same quarter in the prior year. This is largely due to a full quarter of intangible amortization resulting from the Core Deposit Intangible created in the acquisition.

The Company recorded a provision for credit losses of $1.5 million in the third fiscal quarter of 2024, compared to a provision for credit losses of $9.0 million in the same quarter of fiscal 2023. The provision for loan losses in the quarter ended June 30, 2024 was due to prolonged and increased borrower sensitivity to high interest rates and operating costs resulting from inflationary pressures in the C&I portfolio. This was offset by a reduction in balance resulting from reclassifying a portion of the LBC single-family loans as Held for Sale.

The Company’s efficiency ratio in the third fiscal quarter of 2024 was 55.7% (as adjusted, see Non-GAAP Financial Measures below), compared to 58.5% as adjusted in the prior quarter and 51.9% for the same period one year ago.

Income tax expense totaled $18.2 million for the third fiscal quarter of 2024, as compared to $17.7 million for the prior year same quarter. The effective tax rate for the quarter ended June 30, 2024 was 21.97% compared to 20.81% for the year ended September 30, 2023. Although the Company’s effective tax rate may vary from the statutory rate mainly due to state taxes, tax-exempt income and tax-credit investments, much of the change in the current quarter resulted specifically from the LBC acquisition and consideration of California State and Local taxes. The effective tax rate for the quarter ended June 30, 2024 decreased compared to 24.20% for the quarter ended March 31, 2024 due to the size of non-deductible acquisition costs incurred compared to pre-tax income in the March quarter.

WaFd Bank is headquartered in Seattle, Washington, and has 210 branches in nine western states. To find out more about WaFd Bank, please visit our website www.wafdbank.com. The Company uses its website to distribute financial and other material information about the Company.

WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
	June 30, 2024				September 30, 2023
	(In thousands, except share and ratio data)
ASSETS
Cash and cash equivalents	$	2,492,504			$	980,649
Available-for-sale securities, at fair value		2,428,769				1,995,097
Held-to-maturity securities, at amortized cost		447,638				423,586
Loans receivable, net of allowance for loan losses of $203,824 and $177,207		20,873,919				17,476,550
Loans held for sale		468,527				—
Interest receivable		103,410				87,003
Premises and equipment, net		244,529				237,011
Real estate owned		4,209				4,149
FHLB stock		107,282				126,820
Bank owned life insurance		265,819				242,919
Intangible assets, including goodwill of $412,213 and $304,750		452,255				310,619
Federal and state income tax assets, net		129,044				8,479
Other assets		562,895				581,793
	$	28,580,800			$	22,474,675
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Transaction deposits	$	11,929,005			$	10,765,313
Time deposits		9,255,760				5,305,016
Total customer deposits		21,184,765				16,070,329
Borrowings		3,934,514				3,650,000
Junior subordinated deferrable debentures		50,485				—
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024		94,361				—
Advance payments by borrowers for taxes and insurance		38,898				52,550
Accrued expenses and other liabilities		319,438				275,370
		25,622,461				20,048,249
Shareholders’ equity
Preferred stock, $1.00 par value, 5,000,000 shares authorized; 300,000 and 300,000 shares issued; 300,000 and 300,000 shares outstanding		300,000				300,000
Common stock, $1.00 par value, 300,000,000 shares authorized; 153,939,952 and 136,466,579 shares issued; 81,157,173 and 64,736,916 shares outstanding		153,940				136,467
Additional paid-in capital		2,146,149				1,687,634
Accumulated other comprehensive income (loss), net of taxes		54,916				46,921
Treasury stock, at cost; 72,782,779 and 71,729,663 shares		(1,638,943	)			(1,612,345	)
Retained earnings		1,942,277				1,867,749
		2,958,339				2,426,426
	$	28,580,800			$	22,474,675
CONSOLIDATED FINANCIAL HIGHLIGHTS
Common shareholders' equity per share	$	32.76			$	32.85
Tangible common shareholders' equity per share1		27.18				28.05
Shareholders' equity to total assets		10.35	%			10.80	%
Tangible shareholders' equity to tangible assets1		8.91	%			9.55	%
Tangible shareholders' equity + allowance for credit losses to tangible assets1		9.63	%			10.35	%
WEIGHTED AVERAGE RATES AS OF PERIOD END
Loans and mortgage-backed securities		5.18	%			5.08	%
Combined loans, mortgage-backed securities and investments		5.17				5.07
Customer accounts		2.91				2.12
Combined cost of borrowings, junior debentures, senior debt		4.10				3.98
Combined cost of customer accounts and borrowings		3.10				2.46
Net interest spread		2.07				2.61
1Metric is a non-GAAP Financial Measure. See page 12 for additional information on our use of Non-GAAP Financial Measures.

WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
	As of
SUMMARY FINANCIAL DATA	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023
	(In thousands, except share and ratio data)
Cash	$	2,492,504			$	1,505,771			$	1,144,774			$	980,649			$	1,139,643
Loans receivable, net		20,873,919				20,795,259				17,584,622				17,476,550				17,384,188
Allowance for credit losses ("ACL")		225,324				225,077				201,820				201,707				204,569
Loans held for sale		468,527				2,993,658				—				—				—
Available-for-sale securities, at fair value		2,428,768				2,438,114				2,018,445				1,995,097				2,036,233
Held-to-maturity securities, at amortized cost		447,638				457,882				415,079				423,586				434,172
Total assets		28,580,800				30,140,288				22,640,122				22,474,675				22,552,588
Transaction deposits		11,929,005				12,338,862				10,658,064				10,765,313				11,256,575
Time deposits		9,255,760				9,000,911				5,380,723				5,305,016				4,863,849
Borrowings, senior debt and junior subordinated debentures		4,079,360				5,489,501				3,875,000				3,650,000				3,750,000
Total shareholders' equity		2,958,339				2,921,906				2,452,004				2,426,426				2,394,066
FINANCIAL HIGHLIGHTS
Common shareholders' equity per share	$	32.76			$	32.21			$	33.49			$	32.85			$	32.36
Tangible common shareholders' equity per share2	$	27.18			$	26.64			$	28.65			$	28.05			$	27.58
Shareholders' equity to total assets		10.35	%			9.69	%			10.83	%			10.80	%			10.62	%
Tangible shareholders' equity to tangible assets2		8.91	%			8.31	%			9.59	%			9.55	%			9.37	%
Tangible shareholders' equity + ACL to tangible assets2		9.63	%			8.99	%			10.39	%			10.35	%			10.17	%
Common shares outstanding		81,157,173				81,405,391				64,254,700				64,736,916				64,721,190
Preferred shares outstanding		300,000				300,000				300,000				300,000				300,000
Loans to customer deposits 1		98.53	%			97.45	%			109.64	%			108.75	%			107.84	%
CREDIT QUALITY1
ACL to gross loans		1.00	%			1.00	%			1.04	%			1.03	%			1.03	%
ACL to non-accrual loans		367.77	%			370.16	%			445.93	%			400.04	%			370.09	%
Non-accrual loans to net loans		0.29	%			0.29	%			0.26	%			0.29	%			0.32	%
Non-accrual loans	$	61,268			$	60,806			$	45,258			$	50,422			$	55,276
Non-performing assets to total assets		0.24	%			0.23	%			0.24	%			0.26	%			0.30	%
Non-performing assets	$	68,787			$	68,361			$	55,388			$	57,924			$	67,000
Criticized loans to net loans		3.01	%			2.59	%			2.27	%			2.33	%			2.42	%
Criticized loans	$	628,699			$	537,802			$	399,895			$	407,086			$	421,507
Substandard loans to net loans		1.84	%			1.48	%			1.74	%			1.75	%			1.71	%
Substandard loans	$	384,843			$	307,412			$	305,606			$	305,179			$	296,541
1Metrics include only loans held for investment. Loans held for sale are not included.
2Metric is a non-GAAP Measure. See page 12 for additional information on our use of Non-GAAP Financial Measures.

WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended June 30,								Nine Months Ended June 30,
	2024				2023				2024				2023
	(In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable	$	337,118			$	232,167			$	857,251			$	659,070
Mortgage-backed securities		17,523				10,454				41,694				31,489
Investment securities and cash equivalents		37,300				29,859				98,668				70,686
		391,941				272,480				997,613				761,245
INTEREST EXPENSE
Customer accounts		154,359				70,062				367,194				153,831
Borrowings, senior debt and junior subordinated debentures		60,396				33,718				142,399				80,877
		214,755				103,780				509,593				234,708
Net interest income		177,186				168,700				488,020				526,537
Provision for credit losses		1,500				9,000				17,500				15,000
Net interest income after provision (release)		175,686				159,700				470,520				511,537
NON-INTEREST INCOME
Gain (loss) on sale of investment securities		80				—				251				—
Gain (loss) on termination of hedging derivatives		54				(926	)			169				(900	)
Loan fee income		594				1,000				1,988				3,154
Deposit fee income		6,960				6,660				20,460				19,201
Other income		9,567				7,037				21,946				16,412
		17,255				13,771				44,814				37,867
NON-INTEREST EXPENSE
Compensation and benefits		57,169				50,456				180,165				150,970
Occupancy		10,904				10,444				31,193				31,464
FDIC insurance premiums		7,600				5,350				22,070				13,025
Product delivery		6,090				5,217				17,680				15,154
Information technology		13,428				11,661				39,177				36,775
Other expense		14,888				11,571				50,046				36,470
		110,079				94,699				340,331				283,858
Gain (loss) on real estate owned, net		(124	)			722				387				411
Income before income taxes		82,738				79,494				175,390				265,957
Income tax provision		18,178				17,719				36,489				58,739
Net income		64,560				61,775				138,901				207,218
Dividends on preferred stock		3,656				3,656				10,969				10,969
Net income available to common shareholders	$	60,904			$	58,119			$	127,932			$	196,249
PER SHARE DATA
Basic earnings per common share	$	0.75			$	0.89			$	1.78			$	3.00
Diluted earnings per common share		0.75				0.89				1.78				3.00
Cash dividends per common share		0.26				0.25				0.77				0.74
Basic weighted average shares outstanding		81,374,811				65,194,880				71,905,924				65,348,709
Diluted weighted average shares outstanding		81,393,708				65,212,846				71,930,215				65,442,910
PERFORMANCE RATIOS
Return on average assets		0.87	%			1.12	%			0.72	%			1.28	%
Return on average common equity		9.20				11.09				7.18				12.72
Net interest margin		2.56				3.27				2.72				3.49
Efficiency ratio		56.61				51.90				63.87				50.29

WAFD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended
	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023
	(In thousands, except share and ratio data)
INTEREST INCOME
Loans receivable	$	337,118			$	274,341			$	245,792			$	240,998			$	232,167
Mortgage-backed securities		17,523				12,905				11,266				11,695				10,454
Investment securities and cash equivalents		37,300				31,580				29,788				29,017				29,859
		391,941				318,826				286,846				281,710				272,480
INTEREST EXPENSE
Customer accounts		154,359				116,164				96,671				83,402				70,062
Borrowings, senior debt and jr. subordinated debentures		60,396				44,065				37,938				34,611				33,718
		214,755				160,229				134,609				118,013				103,780
Net interest income		177,186				158,597				152,237				163,697				168,700
Provision for credit losses		1,500				16,000				—				26,500				9,000
Net interest income after provision (release)		175,686				142,597				152,237				137,197				159,700
NON-INTEREST INCOME
Gain (loss) on sale of investment securities		80				90				81				33				—
Gain (loss) on termination of hedging derivatives		54				6				109				33				(926	)
Loan fee income		594				550				844				731				1,000
Deposit fee income		6,960				6,698				6,802				6,849				6,660
Other income		9,567				6,048				6,331				6,688				7,037
		17,255				13,392				14,167				14,334				13,771
NON-INTEREST EXPENSE
Compensation and benefits		57,169				73,155				49,841				45,564				50,456
Occupancy		10,904				10,918				9,371				10,115				10,444
FDIC insurance premiums		7,600				7,900				6,570				7,000				5,350
Product delivery		6,090				5,581				6,009				5,819				5,217
Information technology		13,428				12,883				12,866				12,672				11,661
Other expense		14,888				23,275				11,883				11,007				11,571
		110,079				133,712				96,540				92,177				94,699
Gain (loss) on real estate owned, net		(124	)			(1,315	)			1,826				(235	)			722
Income before income taxes		82,738				20,962				71,690				59,119				79,494
Income tax provision		18,178				5,074				13,237				8,911				17,719
Net income		64,560				15,888				58,453				50,208				61,775
Dividends on preferred stock		3,656				3,656				3,656				3,656				3,656
Net income available to common shareholders	$	60,904			$	12,232			$	54,797			$	46,552			$	58,119
PER SHARE DATA
Basic earnings per common share	$	0.75			$	0.17			$	0.85			$	0.72			$	0.89
Diluted earnings per common share		0.75				0.17				0.85				0.72				0.89
Cash dividends per common share		0.26				0.26				0.25				0.25				0.25
Basic weighted average shares outstanding		81,374,811				70,129,072				64,297,499				64,729,006				65,194,880
Diluted weighted average shares outstanding		81,393,708				70,164,558				64,312,110				64,736,864				65,212,846
PERFORMANCE RATIOS
Return on average assets		0.87	%			0.26	%			1.04	%			0.90	%			1.12	%
Return on average common equity		9.20				2.09				10.21				8.73				11.09
Net interest margin		2.56				2.73				2.91				3.13				3.27
Efficiency ratio		56.61				77.74				58.02				51.78				51.90

Non-GAAP Financial Measures and Management Projections

The Company has presented certain non-GAAP measures within this document to remove the effect of certain income and expenses to provide investors with information useful in understanding our financial performance. The Company considers these items to be non-operating in nature as they are items that Management does not consider indicative of the Company's on-going financial performance. We believe that the tables presented reflect our on-going performance in the periods presented and, accordingly, are useful to consider in addition to our GAAP financial results. These measures should not be considered a substitution for GAAP basis disclosures.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way they are calculated herein. Because of this, our non-GAAP financial measures may not be comparable to similar measures used by others. We caution investors not to place undue reliance on such measures. See the following unaudited tables for reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures.

Tangible Measures	June 30, 2024				March 31, 2024				September 30, 2023
	(Unaudited - In thousands, except for ratio data)
Shareholders equity - GAAP	$	2,958,339			$	2,921,906			$	2,426,426
Less intangible assets - GAAP		452,255				453,539				310,619
Tangible shareholders' equity	$	2,506,084			$	2,468,367			$	2,115,807
Less preferred stock - GAAP		300,000				300,000				300,000
Tangible common shareholders' equity	$	2,206,084			$	2,168,367			$	1,815,807
Total assets - GAAP	$	28,580,800			$	30,140,288			$	22,474,675
Less intangible assets - GAAP		452,255				453,539				310,619
Tangible assets	$	28,128,545			$	29,686,749			$	22,164,056
Tangible Metrics
Common shares outstanding - GAAP		81,157,173				81,405,391				64,736,916
Tangible common equity per share	$	27.18			$	26.64			$	28.05
Tangible equity to tangible assets		8.91	%			8.31	%			9.55	%
Allowance for credit losses	$	203,824			$	201,577			$	177,207
Tangible shareholders' equity + allowance for credit losses to tangible assets		9.63	%			8.99	%			10.35	%

Net Income Adjusted for Acquisition Expenses and Other Non-Operating Items	Three Months Ended June 30, 2024				Three Months Ended March 31, 2024				Three Months Ended December 31, 2023
	(Unaudited - In thousands, except for ratio data)
Non-interest income adjustments
Distribution received on LBC equity method investment	$	(299	)		$	(287	)		$	—
(Gain)Loss on WaFd Bank equity method investment		(748	)			2,195				693
Total non-interest income adjustments	$	(1,047	)		$	1,908			$	693
Non-interest expense adjustments
Acquisition-related expenses	$	2,285			$	25,120			$	516
Select non-operating expenses:
FDIC Special Assessment		—				1,800				500
Legal and Compliance Accruals		—				3,000				—
Charitable Donation		—				2,000				—
		—				6,800				500
Total non-interest expense adjustments	$	2,285			$	31,920			$	1,016
Net Income - GAAP	$	64,560			$	15,888			$	58,453
Preliminary ACL provision on LBC loans		—				16,000				—
Non-interest income adjustments		(1,047	)			1,908				693
Non-interest expense adjustments		2,285				31,920				1,016
REO adjustments		124				1,315				(1,826	)
Income tax adjustment		(299	)			(12,274	)			22
Net Income - non-GAAP	$	65,623			$	54,757			$	58,358
Dividend on preferred stock	$	3,656			$	3,656			$	3,656
Net Income available to common shareholders - non-GAAP	$	61,967			$	51,101			$	54,702
Basic weighted average number of shares outstanding - GAAP		81,374,811				70,129,072				64,297,499
Diluted weighted average number of shares outstanding - GAAP		81,393,708				70,164,558				64,312,110
Basic EPS - non-GAAP		0.76				0.73				0.84
Diluted EPS - non-GAAP		0.76				0.73				0.84

Adjusted Efficiency Ratio	Three Months Ended June 30, 2024				Three Months Ended March 31, 2024				Three Months Ended December 31, 2023
	(Unaudited - In thousands, except for ratio data)
Efficiency ratio - GAAP		56.6	%			77.7	%			58.0	%
Non-interest expense - GAAP	$	110,079			$	133,712			$	96,540
Deduct acquisition-related expenses		2,285				25,120				516
Deduct select non-operating expenses		—				6,800				500
Non-interest Expenses - non-GAAP	$	107,794			$	101,792			$	95,524
Non-interest income - GAAP	$	17,255			$	13,392			$	14,167
Total non-interest income adjustments		(1,047	)			1,908				693
Non-interest income - non-GAAP	$	16,208			$	15,300			$	14,860
Net Interest Income - GAAP	$	177,186			$	158,597			$	152,237
Non-interest income - non-GAAP		16,208				15,300				14,860
Total Income - non-GAAP	$	193,394			$	173,897			$	167,097
Adjusted Efficiency Ratio		55.7	%			58.5	%			57.2	%

Adjusted ROA and ROE	Three Months Ended June 30, 2024				Three Months Ended March 31, 2024				Three Months Ended December 31, 2023
	(Unaudited - In thousands, except for ratio data)
Net Income - GAAP	$	64,560			$	15,888			$	58,453
Net income available to common shareholders - GAAP	$	60,904			$	12,232			$	54,797
Average Assets		29,703,337				24,907,376				22,381,459
Return on Assets		0.87	%			0.26	%			1.04	%
Average Common Equity		2,647,056				2,338,483				2,147,580
Return on common equity		9.20	%			2.09	%			10.21	%
Net Income - non-GAAP	$	65,623			$	54,757			$	58,358
Net income available to common shareholders - non-GAAP	$	61,967			$	51,101			$	54,702
Average Assets		29,703,337				24,907,376				22,381,459
Adjusted Return on Assets		0.88	%			0.88	%			1.04	%
Average Common Equity		2,647,056				2,338,483				2,147,580
Adjusted Return on common equity		9.36	%			8.74	%			10.19	%

Important Cautionary Statements

The foregoing information should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

This press release contains statements about the Company’s future that are not statements of historical or current fact. These statements are “forward-looking statements” for purposes of applicable securities laws and are based on current information and/or management's good faith belief as to future events. Words such as “expects,” “anticipates,” “believes,” “estimates,” “intends,” “forecasts,” “may,” “potential,” “projects,” and other similar expressions or future or conditional verbs such as “will,” “should,” “would,” and “could” are intended to help identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements related to the potential sale of approximately $0.5 billion of single-family real estate loans categorized as Held for Sale, and statements relating to the benefits to the Company and our shareholders of the LBC merger, including its anticipated effect on earnings per share. Although the Company believes any such statements are based on reasonable assumptions, forward-looking statements should not be read as a guarantee of future performance, and you are cautioned not to place undue reliance on any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement.

By their nature, forward-looking statements involve inherent risk and uncertainties including the following risks and uncertainties, and those risks and uncertainties more fully discussed under “Risk Factors” in the Company’s September 30, 2023 10-K, and Quarterly Reports on Form 10-Q which could cause actual performance to differ materially from that anticipated by any forward-looking statements. In particular, forward-looking statements relating to the potential sale of approximately $0.5 billion of single-family real estate loans categorized as Held for Sale are subject to risks and uncertainties that affect our ability to sell the loans, the anticipated timing of the sale, and the final purchase price for the assets, including, without limitation continued fluctuations in interest rates, deteriorating economic conditions or declines in the real estate market, and regulatory limitations. Other forward-looking statements relating to our financial condition or operations are subject to risks and uncertainties related to (i) fluctuations in interest rate risk and market interest rates, including the effect on our net interest income and net interest margin; (ii) current and future economic conditions, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, a potential recession, the monetary policies of the Federal Reserve, and slowdowns in economic growth; (iii) risks related to the integration of the operations of Luther Burbank Corporation; (iv) financial stress on borrowers (consumers and businesses) as a result of higher interest rates or an uncertain economic environment; (v) changes in deposit flows or loan demands; (vi) the impact of bank failures or adverse developments at other banks and related negative press about regional banks and the banking industry in general; (vii) the effects of natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as the COVID-19 pandemic) and the resulting governmental and societal responses; (viii) global economic trends, including developments related to Ukraine and Russia, and the evolving conflict in Israel and Gaza, and related negative financial impacts on our borrowers; (ix) litigation risks resulting in significant expenses, losses and reputational damage; (x) our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking” and identity theft; and (xi) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716784466/en/

WaFd, Inc.

425 Pike Street, Seattle, WA 98101

Brad Goode, SVP, Chief Marketing Officer

206-626-8178

brad.goode@wafd.com

Source: WaFd, Inc.

FAQ

What were WaFd's earnings for the quarter ended June 30, 2024?

WaFd reported quarterly earnings of $64.56 million for the quarter ended June 30, 2024.

What was WaFd's earnings per share (EPS) for the quarter?

WaFd reported EPS of $0.75 for the quarter ended June 30, 2024.

How did WaFd's net interest income perform year-over-year?

WaFd's net interest income increased by 5% year-over-year to $177 million.

What was the change in WaFd's customer deposits?

WaFd's customer deposits increased by 31.8% for the quarter ended June 30, 2024.

How did WaFd's net interest margin change?

WaFd's net interest margin decreased from 3.27% to 2.56% year-over-year.

What was the impact of acquisition-related costs on WaFd's earnings?

WaFd incurred $2.3 million in acquisition-related costs for the quarter ended June 30, 2024.